(3) Investment interest For purposes of this subsection— (A) In general The term “investment interest” means any interest allowable as a deduction under this chapter (determined without regard to paragraph (1)) which is paid or accrued on indebtedness properly allocable to property held for investment. (B) Exceptions The term “investment interest” shall not include— (i) any qualified residence interest (as defined in subsection (h)(3)), or (ii) any interest which is taken into account under section 469 in computing income or loss from a passive activity of the taxpayer. (C) Personal property used in short sale For purposes of this paragraph, the term “interest” includes any amount allowable as a deduction in connection with personal property used in a short sale.


26 USC § 163(d)(3)

Scoping language

For purposes of this subsection
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